Put tax rebate check to work – in Minnesota


Today, the President signs Congress’ bipartisan economic stimulus / tax rebate bill. Whether the check is in the $300, $600 or $1,200 range, we know where it can do the most good.

Minnesota made products and retailers will benefit greatly, and so will the overall Minnesota economy, if a good portion of that returned tax flow is pumped into the local economy.

“It certainly wouldn’t hurt,” said Laura Kalambokidis, an applied economist at the University of Minnesota who specializes in community economics and public finance.

It would actually do wonders for local artisans who sell their products through the Artists Mercantile store at 24 W. 7th Place in St. Paul, said storeowner Jennifer Bisch-Hansen. “We’ve got stained glass and blown glass art works here that would take the whole check. We’ve got St. Paul and Bemidji (made) hats that would take part of the check.”

Regardless, she said, whatever the price for her 70 artists’ works, the entire value of the sale and purchase would remain in Minnesota and rattle around in the Minnesota economy.

That part is the given, said the University’s Kalambokidis. Just how much more value buying local brings the Minnesota economy isn’t generally known.

The type of product, how many local ingredients are used, and other factors such as how much imported oil is used in manufacturing and transporting all raise or lower the economic benefit to the state. Nonetheless, said Kalambokidis, “Whatever the local benefit is from local sales would apply to these tax dollars coming back.”

When Minnesota 2020 launched the Made in MN Gift Guide for the holiday shopping season, it was noted that researchers have affixed a local benefit from studying retail sales. It is significant.

The Andersonville Study of Retail Economics, prepared by Civic Economics in October 2004 and using Minnesota Department of Revenue gross retail sales for 2003, showed that 68 cents of the retain dollar spent at locally-owned retail shops stay in the local economy. In contrast, only 43 cents of the dollar spent at national and multinational chains stay in Minnesota.

That 25 cents on the dollar differential would even grow if the products sold at retail are uniquely Minnesota made products, said Gary Winget, general manager of the Minnesota Wood Campaign marketing association for 150 northern and central Minnesota artisans and wood products manufacturers.

Those companies, and their products, are listed at the True North Woods Wood Products shared web site link from the Made in Minnesota Gift Guide. The products are made from Minnesota wood grown with sustainable forestry methods, Winget said, meaning those purchases would really give Minnesota shopper “a bang for the buck.”

How much the $161 billion federal tax rebate plan may help the faltering U.S. and Minnesota economies is an open question. The money will need to be returned to citizens and spent this spring before any measuring can be done, and then it will be either praised or condemned depending on how the economy responds to it and other forces.

What the rebate program represents is a little bit better than a 1 percent “Keynesian nudge” to the U.S. economy, of $13.1 trillion, said Roger Prestwich, director of the international business program and a management professor at Metropolitan State University.

Whether that is enough, whether it is targeted properly, or whether it would have been better used reducing U.S. public debt will be argued for years, he suspects. What’s more, he said, low income households that need to make purchases or basic goods and reduce credit card and other debts will be wise to respond to those immediate concerns.

Higher up the economic ladder, households will have the opportunity to view the tax rebates as “discretionary funds,” he said. “I don’t know how many people think this way, but they could have an impact on the Minnesota economy if they selectively try to do some good with their purchases.”

If you’re looking for ways to buy local, see Minnesota 2020’s Made in MN Gift Guide.